Confessions of a benefits manager: Candid looks into retirement planning

19th April 20184:30 pm26th June 20189:52 am

I need you to know I am really not that old. It is true that a girl in the bank told me, condescendingly, that ‘nowadays’ people do not ask for statement folders. It is also true my hairdresser keeps referring to her mother and me in the same sentence. Yet, despite these subtle indignities, I am actually quite young. Really. However, I am suddenly, inexplicably, interested in my own pension.

At work, we have been doing some education on the pension freedoms and, as a result, there have been several 50-somethings waving a cheery goodbye. I know it is a hopeless fantasy, but what it if I could squirrel away enough savings to retire while I still have some bladder control myself? I am not even in the right decade yet, but it would be nice to know I could consider early retirement when I get there.

It is shaming to admit, but even as a benefits professional, I do not have a proper handle on my own pension. I get statements and shove them in a file, and I have not looked to see what that means in terms of a potential retirement date. So now, I dig out all my statements and plug the figures into a spreadsheet. I add in individual savings accounts (Isas) and bits of savings.

This is the first time I have added up my total net worth. Not exactly a fortune, but not bad either. The thing is: despite all my professional exposure to pensions, I have no idea if it is enough. Of course, my providers give annuity estimates, but added together, the total pension seems ridiculously small. Frankly, it would hardly cover the cost of Tena Lady pads, let alone a life of ease in early retirement. And who buys annuities any more? I am going to need advice.

Sourcing an independent financial adviser

The Department for Work and Pensions’ (DWP) website seems a good start, because that is where we send our employees. It takes several clicks to find the ‘get help’ page which leads to a website of ‘trusted’ advisers.

The first listing is a local accounting firm. I email to enquire about charges, explaining that I just want someone to take a look at my spreadsheet. I mention that I have a financial wellness benefit so I might even be able to get its fees funded by work. It replies to tell me that my budget wouldn’t nearly cover its time. I had sort of expected that. Wealth experts are not called such for nothing. I ask if it could invoice half in one financial year and the other half in the next; then I would have double the amount to spend. Oh no, that won’t be nearly enough, it says. Perhaps I should look at the ‘trusted’ advisor site again to see if someone else can help? Too right.

I look at the next one on the list and it says they only deal with companies and high-wealth individuals. Another says I must have an incredible minimum fund value. Finally, the fourth pension adviser looks friendlier, and has several testimonials from happy clients. I make an appointment.

Basil leans back in his leather chair and peers at me. What an earth made me come to an independent financial advisor (IFA), he asks? Erm, to get advice?

But what is this really all about, he asks? Something has upset him, and it seems it is my spreadsheet. No one comes in with a spreadsheet, he says. I explain that I work in benefits. He looks at me suspiciously. I wonder if he thinks I am an auditor from the Financial Conduct Authority (FCA). He is also quite cross about the results of the attitude-to-risk survey he sent me. No one is that risk-averse, he tells me. What has happened in my life to make me that way? I didn’t realise he offered psychological assessments as well as financial advice, I say, thinking it is none of his business.

The right financial advice?

It rapidly becomes clear that I have made a massive mistake in coming here. He is not in the least interested in charging a simple fee to review my plan. What he really wants to do is sell me a platform. I can transfer my three pension plans onto one simple platform, he tells me. I can also move in my Isas and cash. No one holds cash nowadays, he says. He says I should sell my shares and put that into the platform too. No one holds shares directly any more.

And what would that cost, I ask? A mere 8% of the total transferred in, and then close to 1% per year, he tells me. Seriously. And what are the benefits? Well, he would manage my funds to maximise returns. Do I even know what returns I am getting on my pensions now? Actually, I do. It is one of the things I put into my spreadsheet. So there.

My head is spinning. I am a self-confessed risk-hater and yet, he would have me move my entire life savings into higher risk investments, charging a heavy fee in the process. I do not call that advice. Even more scary, this is an IFA, authorised by the FCA, and, in effect, recommended by the DWP via its website. No wonder there are so many scandals coming out since the pension freedom changes. I work in the benefits industry and yet I need help. What chance has someone who has spent their life working in a steel factory?

I decide to rely on my own judgement, and maybe consult a tax accountant on some specifics. Basil follows up by email to see if I want to take things further. I do not reply. After all, no one trusts IFA’s nowadays.